at&t, the second largest wireless provider in the U.S., just announced it agreed to purchase T-Mobile USA from its parent company, the German Deutsche Telekom, for $39 billion in cash and stock. The press release came out earlier today, and stresses the fact that a final agreement has already been approved by the companies’ boards of directors – in other words, the T-Mobile USA brand will likely disappear soon, and should eventually be renamed at&t.
The deal, if ratified by federal regulators such as the FTC and the FCC, will help at&t become the largest wireless provider in the United States, with about 130 million subscribers. Verizon would become the second largest wireless provider in the U.S., with a little over 100 million subscribers.
The move will allow at&t to better compete against Verizon, as the addition of T-Mobile’s network will expand its 3G coverage, and will prepare the company for a larger 4G LTE roll-out, over the next years. According to the company, the combination of T-Mobile and at&t’s networks will help at&t cover 95% of the population of the U.S.
The purchase will also make at&t the sole sizable GSM provider in the United States, as all its direct competitors such as Verizon and Sprint use a different, incompatible technology (CDMA).
Note that the move is a surprise to many, as Sprint was expected to merge with T-Mobile, and few expected at&t to actually buy the company. Problems such as incompatibilities between Sprint’s and T-Mobile’s network could explain why Deutsche Telekom decided to sell T-Mobile to at&t instead.
Also worth noting, T-Mobile will most likely stop its current ad campaign targeted at the iPhone, at&t and Verizon, as its subscribers should eventually be able to use the iPhone as well. Do not rejoice just yet though, as according to T-Mobile, the acquisition will take 12 months, which means that the company will not offer the iPhone to its subscribers until the iPhone 6 is released, in 2012: “Is T-Mobile USA getting the iPhone? T-Mobile USA remains an independent company. The acquisition is expected to be completed in approximately 12 months. We do not offer the iPhone. We offer cutting edge devices like the Samsung Galaxy S 4G and coming soon our new Sidekick 4G.”
The full press release is available here.